Political Jurisdictions in Heterogeneous Communities

53 Pages Posted: 19 Jul 2004 Last revised: 24 Dec 2022

See all articles by Alberto F. Alesina

Alberto F. Alesina

Harvard University - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Reza Baqir

International Monetary Fund (IMF) - Research Department

Caroline M. Hoxby

Stanford University; National Bureau of Economic Research (NBER); Hoover Institution; Stanford University

Multiple version iconThere are 3 versions of this paper

Date Written: August 2000

Abstract

We investigate how the number and size of local political jurisdictions in an area is determined. Our model focuses on the tradeoff between the benefits of economies of scale and the costs of a heterogeneous population. We consider heterogeneity in income, race, ethnicity, and religion, and we test the model using American school districts, school attendance areas, municipalities, and special districts. Using both cross-sectional and panel analysis, we find evidence of a significant tradeoff between economies of scale and racial heterogeneity. We find weaker tradeoffs between economies of scale and income or ethnic heterogeneity. That is, it appears that people are willing to sacrifice the most, in terms of economies of scale, in order to avoid racial heterogeneity in their jurisdiction.

Suggested Citation

Alesina, Alberto F. and Baqir, Reza and Hoxby, Caroline M., Political Jurisdictions in Heterogeneous Communities (August 2000). NBER Working Paper No. w7859, Available at SSRN: https://ssrn.com/abstract=240062

Alberto F. Alesina (Contact Author)

Harvard University - Department of Economics ( email )

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Reza Baqir

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Caroline M. Hoxby

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National Bureau of Economic Research (NBER)

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Stanford University ( email )

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